Tuesday, November 27, 2012

You’ve seen McKenna’s Gold, The Good, the Bad
and the Ugly, Goldfinger and Gold Rush. Deadly metal. A few lives don’t count
for the reward. Goldfinger radiates menace....touches on the economic aspects (smart guy). Gold holdings. Its working like the bomb the guy
designed for the movie “Speed” – you can't slow down. Central banks around the
world hold huge quantities of gold…it’s a stupid, useless metal relative to
its price. By holding it, the price stays up….if they sell it….they’d do what
Goldfinger couldn’t.

Indian citizens consume 800 tonnes of imported
gold annually (domestic consumption is a multiple of that..2000 tonnes plus when I checked last a long time ago). At today’s prices, that’s
about US $ 46 billion or a little less than 3 % of real GDP. The Reserve Bank
of India is concerned. Import duties are up to 4% in a bid to reduce
consumption. The govt will earn $ 1.8 billion in revenue at current import
levels. Right? Wrong. $ 1.8 billion is
arbitrage window for smugglers to bring in 800 tonnes of gold. 15 years ago, the same govt reduced import
duties to a point where smuggling became unattractive business. Organized crime
went back to extortion and kidnapping (read the front pages of a random Mumbai
newspaper through 1997 and 1998 to verify).

In the US, a recent article in The Economist focused
on differential taxes on cigarettes between neighbouring states. Higher prices should curb smoking.
Right? Wrong. Its created an opportunity
to smuggle cigarettes across state borders. Cigarettes are also a versatile
trading currency, if you’ve read and watched the prison stories – war and
criminal.

Gujarat, the home state of Mahatma Gandhi, has
had prohibition in force since independence. It’s the only state that you can
get home delivery of your favourite brand anytime you want. The long coast of
Gujarat provides plenty of scope for smuggling.
The excellent roads built (I’m told, I haven’t traveled on them) are
handy for the powerful cars that smugglers invest in while the L1 quotation
supplies (L1 is lowest bidder, for the uninitiated) of cop vehicles can’t keep
pace. So guess who wins the chase in
this sequence. It ain’t Dirty Harry.

States within India often have different tax
rates for products and services. Result. Cross border smuggling, invoice
fudging etc. Just picture armed cops in pursuit of a jeep carrying (gulp!)……..electronic
computer parts…..while there’s mob violence unabated in a nearby town. Its like that
guy at airport security in the movie "Airplane" telling the passenger with the dog, “Ma’am,
I can’t let him go on board..no way….”.
In the background, some guys are walking through with automatics and
rocket launchers.

At an international level, this is called tax
planning by legitimate corporations who book taxes in obscure island countries famed
for nice beaches and clear blue waters.
And its all legal. The biggest price they pay is being called “the 1%”, “anti-national”
and “anti-people”. Terrible stuff. I’m sure the accountants are feeling remorse
while they sip their rum cocktail at the beach barbeque on starlit nights.

The “Drug War” led by the United States and
United Nations is a colossal disaster.
Drug smugglers running heroin freely in the late 60s, said it was an
easy competitive market with low margins. There wasn’t much killing then and much
of the shooting was the users in their arms. Organized crime and drug cartels
flourished post-drug war to the multi-billion dollar enterprises they are
today. Further, their profits have been reinvested in new, higher value added
formulations that are good for business. On the other side, its led to the creation of
a huge bureaucracy to combat these criminals – with associated vested
interested. “Vested” means stakeholders.
Those employed in these bureaucracies with their large budgets plus
those who supply the equipment and services to sustain them – no one wants this
war to end. It means they lose business and / or a job. Even Batman struggles
with “moving on” ("The Dark Knight Rises") after Gotham’s crime free – and he’s a good guy.

Once a distribution system is streamlined (this
includes greasing corrupt law enforcement machinery), it can be used to deliver
a variety of products – bombs, weapons etc.
The reported plot to assassinate a Saudi ambassador in the US last year,
had the Iranian guy talking to a Mexican “drug” executive (sic). (A banker friend once
told me that dispensing cash through ATMs is not very different from delivering
pizza – aaah, the world of logistics).

When you extend such ridiculous laws to more
common features of life in a developing country, it’s hardly surprising that crooked
politicians, corrupt administrators and organized crime thrive. It’s also not surprising that ordinary
citizens become criminalized or are forced to bribe – a sustainable (the dream
of development practitioners) solution for criminal enterprise. Some examples
you may relate to:

i)Mandatory
food certification – a recent article featured “underground” supper clubs in
the USA. Ingredients bought from the
same sources as every home, cooked for those who’d like to eat it and are
willing to pay. Its illegal.

ii)Street
food – ubiquitous in any large city anywhere in the world. Street vending is
illegal in most places – you aren’t allowed to sell. Forget that these
entrepreneurs are trying to earn an honest living providing food at cheap
prices to the citizens of the city, who voluntarily purchase it and consume it.
The largest food-related health epidemics in India – adulterated cooking oil
normally through “legal” traders (and it ain't Walmart), often cheating on quantities to make the slim
margins that enable them to function.

iii)Licence
/ permit systems – an official of the real estate developers association in
India has publicly stated that with about a 100 different permissions required
from different civic departments, bribery is inevitable. As a result, real
estate sales demand 30% of the sales price as cash or “black” money from
buyers. And that's a conservative estimate.

Fiscal policies have been the Angel investors
of organized crime. They create a huge arbitrage opportunity, enough to justify
scale. Even without scale, it creates
huge opportunities for crooked administrators everywhere, including rich
countries. When such things happen in parts of the world with poor government
and judicial enforcement, it’s the road to disaster. Militias (look at mineral rich Africa, drug
rich northern Burma and Afghanistan etc) thrive. Where it isn’t militarized,
crooked politicians love the access to illegal money for political reasons.
Real estate dealing in India (and other countries like ours) is a huge source
of finance for crooked politicians, many in bed with criminals of all
denominations. It’s a secular business - so it meets that aspect our Constitution without reservation.

I wouldn’t be surprised if they’d discovered a
shrine in the late Pablo Escobar’s palace with statues of the leading lights of
the anti-drug war – the guardian angels who’ve given impetus to the business.

And in case you think these guys are
sleazeballs – they make profits in cash for providing services and products, a
cash return on investment. Not selling dreams or notional values of promised
profits on a piece of paper with a price tag, based on long maths equations
that require a Ph.D. to decipher. And sink
your family’s fortunes and a country’s fortunes overnight…..and its all legal!

Thursday, November 15, 2012

Recent developments across the globe have provided plenty of entertainment
and drama. Like it has been the case for a couple of decades now, there will be
plenty of scope for extending book and movie franchises and some potential
blockbusters. Some of these are listed below:

“The Spy Who Loved Me” – an author’s inside
view of the deadly military engagement in the Middle East

“Bloodsport” – the true saga of the Tour de
France

“Kill Bills” – creative accounting by
Parliamentarians in democracies as they fight to implement austerity measures

“Gone with the Wind” – New York’s fight to
maintain pre-eminence against the evil forces of nature

“The Italian Job” – succession planning in a south
Asian democracy

“For a Few Dollars More” – defence procurement across
the globe (bonus chapter on "How to sell a toilet seat for $ 1,000).

“The Seven Per Cent Solution” - how to beat the competition in winning govt
contracts in Africa and East Asia

Monday, November 12, 2012

The assignment uses Bernadette Mayer's suggestion in "writing experiments" : "Using phrases relating to one subject or idea to write about another. For example, use science terms to write about childhood or philosophic language to describe a shirt."

I used an article on the Economic crisis (2008 and thereafter) to write about human relationships and (implicitly) marriage. The article : Getting to Normal by Daniel Gros.

Thursday, November 08, 2012

“Skyfall”, the latest Bond flick is pretty
entertaining. As we exited the theatre, one of the blokes was commenting to his girlfriend, “Its become like a Hindi movie – revenge, family, and all that”.
I like Hindi movies and I liked this Bond movie too. The sole sore spot was
this Bond girl who’s acting talent is God like – you can’t see it. Thankfully,
she’s got a shot role (sic).

A significant event was to see the impact of Dr
Ramadoss. The anti-smoking efforts at the theatre. It begins with a gory clip of what happens to
smokers – concluding with a towel (black) being squeezed out and filling a mug– that’s the
annual tar intake for an average smoker, according to the ad. If you’re a
smoker, the urge to have a puff climaxes with the clip and you want to race out
to grab a puff. Those who don’t smoke
are wondering why the main feature has been delayed for this.

Then, during a taut moment in the flick, a
character (a few of them actually) lights up and THERE”S A STATUTORY WARNING IN LARGE
PRINT AT THE BOTTOM OF THE FRAME!! Also
noticeable for the strategic product placement at points in the movie. There’s
a notebook computer that’s clearly VAIO, just in case you forgot that Columbia
Pictures is owned by SONY. Let’s call these guys – Big-Step Brother.

Big Brother is here telling you to be a good
boy (or girl). Is what they hope. Step Brother is happy that you spend on his
product – regardless of the use you put it too.

What if we extend the “ multi-tarrer” approach to the movies in entirety and
commercialize it, then….

Q :
James, these shoes have inbuilt radio transmitters that can frequency
hop on Cellular Networks………..

STATURORY WARNING: Usage of wireless frequency in cellular
spectrum is permitted by service provider who won the auction of 2G/3G/4G spectrum.

Bond film’s budget just went up by about Rs
20,000 crores. Remember his shoes will be on global roaming.

PRODUCERS' CAVEAT: Made from open source, no copyright infringement

(I'm not joking about this. A recent article featured the auction of a music cassette that an Apollo mission took to the moon with Simon and Garfunkel, Jefferson Airplane etc on it. Several readers' comments stated - they'd be arrested on return these days for IPR violations!!! It was a blank tape recorded on)

ADVERTISMENT : What
an IDEA, Sir ji!

SCENE IV – ITEM NUMBER

The hero adjourns to the Nightclub to nail some
underling villain. Its an opportunity for an “item” number and the hero to
dress well – (the post 2008 recession may have producers cutting back on
Armanis and Gucci being ruined in action sequences in sewerage pipes). Of
course, we don’t wonder everyone is wearing dark glasses at night.

STATUTORY WARNING: Usage of loudspeakers after 10 pm only with
written permission from your local police station.

(Also, given the age of the dancers): Liquor
will not be served to those under 25. ID proof may be required.

ADVERTISMENT:

SANDY – Sound systems to blow your mind

(to be
placed at point hero shoots underling in the head.)

RAYMAN – Dark glasses that can see in the dark.

SCENE V - CLIMAX

Climax: Total mayhem. Guns, bullets, explosions
– the building collapses, the trees are on fire.

STATUTORY WARNING: Ownership of Guns without a license is
prohibited. Only 3 litres of kerosene permitted at subsidized rate. Villian’s henchmen cannot claim NREGA funds
during the period of shoot (sic).

Sholay Limited – fires created through usage
of solar power on film sets.

PETA – all microbes on set safely evacuated to
labs prior to destruction of sets. Only animal left was the villian, who wasn't hurt during shooting.

Somewhere, in between all this – you can pay
attention to the dialogue. Maybe PVR will offer power Speed Reading classes with the popcorn). Though, if you’re watching some film
like the Agneepath remake (no dialogue)…or Karan Johar (only songs……..and then
some words like “love’…) or a Steven Segal movie (he’ s mumbling anyway).

Sunday, November 04, 2012

A recent phenomenon in daily newspapers has
been the introduction of a health page.
The health page features research studies undertaken on various health issues. It’s
a very secular page. All kinds of studies make the column. Just to highlight
the range:

“Horror movies burn calories.” – If you’re a
big fan of H P Lovecraft and his genre, dig into your buttered popcorn and
fried chicken. No fear. Incidentally, "The Shining" was voted the scariest horror flick ever in the UK, based on a sample size of 34 (or something). Now it can be promoted as an entertaining weight-loss programme as well.

“4 most common sleeping positions discovered
with related personality attributes”. – that’s right, 7 billion people on this
planet sleep in four positions and represent four personality types. What are
these marketeers cribbing about when their product launch bombs? Can’t figure
out 4 types of personalities after a billion dollars in development – please return
your marketing MBA to Harvard. This research was undertaken by a hotel on about
a hundred guests.

“Facebook, email more irresistible than sex” – this based on a survey of 205
people. Given a choice between the urge to have sex and check email while you’re
on the train going to work, you’ll get on Facebook.

The page makes really interesting reading and
is appropriately placed opposite the comic strips in some papers. Research
studies like the above, support every phantom menace, superstition and point of view. Its truly egalitarian.

Supposing we applied such acceptable,
mainstream research studies to everyday conversation, how would our world
change? Let’s hypothesize a few everyday situations:

Scenario A

On Flight Landing:

“Ladies and Gentleman, we are delighted to
welcome you to xxxxxx International Airport. ………and wish you a pleasant stay on
the beautiful winter’s day.” (Flight attendant displaying initiative at the
end).

Researcher : Of the 126 people on the flight,
79 are traveling on work – 32 are behind schedule on assignment, 15 have a
painful boss or client to meet, 11 are
suffering from various health ailments, 3 have to chase payments from errant
clients, 14 are applying for a new job,
3 have serious marital problems. 1
person is happy. Of the remaining 47 –
12 have hearing defects, 4 are visiting a
hospital for advanced cancer patients,
17 are dreading meeting their spouse, 8 are dreading the taxi
queue. Research recommends : “We have a complimentary
4 minutes power Yoga and meditation class at the arrival lounge to ensure your
sense of calm for the violent day ahead of you”.

Scenario B

“Good Morning, children! How are we today and
are we looking forward to class today?”. Teacher to classroom.

Researcher: Its
winter, about 8 degree C outside and drizzling and the teacher has just walked
into class carrying the Unit Test question paper in Maths. 38 out of the 40
children hate maths, 28 can’t stand the teacher, 39 are freezing in the cold, the 40th
is wearing Arctic inners and is warm. Research recommends “Children it’s a miserable
day for your lousiest subject, but I’m going to cheer you up….the LCD
flatscreen in the class will be on CARTOON NETWORK while you do your test”.

Scenario C

“As usual, I’m looking forward to the frank
discussions to approve the projects submitted for sanction to this Meeting of
the Committee of Directors.” _ MD to Committee of Management.

Researcher: Of the 10 other members on the
Committee, 6 know that the MD represents 60% shareholding and doesn’t give a
shit about their viewpoint, 2 are
checking their Android phones to strike latest deals on purchase and sale of
shares based on the Meeting decisions, 1
is romancing his secretary via chat on his I-Phone and the 10th is actual
paying attention – he’s the MD’s son. Recommendations: “Why don’t you guys just
sign here and drift to the lunch room for some wine and food, while I complete
this sham meeting and join you?” – might be a more morale boosting way of doing
things.

Scenario D:

CEO to company officials at an offsite with
specially invited VIP guests – closing remarks:

“….and I’m really happy that we have achieved
our record sales for last year due to the strong FAMILY feeling amongst us……”

Researcher:
Of the 35 people present in the room, 24 have “dad” issues, 12 were
regularly beaten up by their fathers, 17 have control freak moms, 23 have jealous siblings who sneaked on them
to their parents earning them a beating or quite simply downplayed their role
in family, 7 have run away from home at least once in their teen years. 1 person is happy about this,
he grew up in an orphanage and is now a successful general manager. Recommendation: “Our incentive policy of
12.5% commission on sales above target has suitably motivated the greed in our
team and I recommend extending the policy……”.

Maybe we could submit these to the Management and
Industry page as researched wisdom. When
read along with stock brokers’ views on the economic outlook, it’d be a laugh
riot….except if they’re dealing with your investment money.

It was 1975.
If you were a middle class-kid living in urban India, entertainment
options after school included, inter alia, your evening game (soccer, cricket,
badminton – if you were rich), watching
the traffic, chasing butterflies in the garden (if you had one) and watching
Krishi Darshan (literally “Visiting the Farmer”) on the telly and learning
about the benefits of urea to crop growth.
You could also work on graffiti on your neighbour’s wall and risk his
ire (it’s a real kick getting even with the grouchy uncle who never returns the
cricket ball that lands in his compound).

On one such evening, The Kid was sitting with
his friends (three guys, two girls – rain stopped play, so the kids are sitting
in a shed) discussing the previous evening’s TV programme.

(TRUE STORY LIBERALLY EMBELLISHED FOR DRAMATIC
EFFECT)

With just one channel to choose from, there was
never much debate on what to discuss about TV. The chosen one for the moment
was a lady singer from Bangladesh, beautiful voice and lovely looking woman.

“She’s a really good singer, but her ghazals
sound horrible”, says The Kid.

“What?!!! HOW CAN YOU SAY THAT? DON”T YOU KNOW
SHE’S CALLED THE GHAZAL QUEEN?!!!!”, - his friends in chorus - if screaming together qualifies as music.

“Abbey, he’s an Angrez ke aulad from Bombay”,
pipes in Sanjay – he’s the leader of the pack. This is normally the alpha male –
the guy who can beat everyone else up – just like the days of Alexander and Kublai
Khan. When you have a critical mass of
buddies, you can become Emperor and Great Conqueror.

“She has been recognized as Ghazal Queen in The
Times of India”. This is Laila’s contribution. Laila is the Cleopatra-female of
the pack – very articulate, extremely knowledgeable and beautiful - and de
facto leader of the women’s wing in the precinct. Her Mom is a Minister in the
Central Government. The Times of India, of course, is the arbiter of all truth
in this crowd.

After some heated debate, The Kid is now confronted
with a tricky situation –

He can either battle through on a matter of
principle – “she-sounded–awful-to-me-on–the–ghazals-and-the-Times-of-India-isn’t–sitting-in–my-eardrum”
is one course of action. This will have consequences such as social ostracism
by new found friends and likely hard tackles on the soccer ground for a few
days.

OR

He can do the “maybe-you-are-right-and-the-dog-was-barking-while-she-sang”
line of rapprochement. Veiled threats wafting through the shed included
zero-scope for making friends with the girls plus a beating by the Leader somewhere
down the line.

The dog barked and sanity was restored along
with the singer’s sobriquet as Ghazal Queen.
Everyone seemed happy about convincing The Kid otherwise. The group
retired to catch the latest episode of Krishi Darshan. They would find out that
this one was a cow-dung special. That was the bullshit for that day.

Similar things abound in adult spaces about
forty years later. A key benefit of the
Internet and electronic media is that the mob now has a louder megaphone to
back brute numbers.

Here are some gems that one routinely encounters:

“Hurricane Sandy is the worst storm ever “……media
pandemonium. Records indicate its come in at number 17 (since 1900) in bad
storms indexed by insurance companies with the met guys. Poor New York has
floods, electricity and telephones down, transportation disrupted and,
tragically, some people died. These things don’t happen when storms hit other
places (the cyclone in Andhra in 1977 killed about 10,000 – even the media in
India barely mentions it. It’ll probably turn up in some newsreel called “Classics”).

“You mean you don’t care about the environment….”
– this to a person who’s expressed a view that carbon-taxes are a dumb way of
doing it or efficient operations are inherently environment friendly and
profitable. The pro-environment mob MUST endorse carbon taxes and profit cannot
coexist with efficient use of natural resources. Does this sound like a
Fundamentalist?

“Romney can’t be trusted, he’s the 1%.” or some
variant thereof. Its Romney’s fault that he is rich. By inference, rich people
can’t be trusted with public welfare. Poor people are likely to be corrupt -
they have an incentive to be. This leaves the middle-class. (No wonder rich and
poor politicians work on screwing the middle class……they create all the
electoral problems.)

“Arguably the greatest Grand Slam final every
played….” Is a preferred description for every five-set men’s final played in tennis. The “greatest”
has been improved upon, on an average, about 2 to 3 times a year. But a generation grows up believing this to
be true, every year.

“How CAN YOU SAY SACHIN SHOULD RETIRE?!!!!! Don’t
you know he’s our greatest batsman ever…!!!”…….after Sachin’s sole century in
many months has been against Bangladesh (or some such sordid sequence).

The above captures a typical line of argument
on a random subject in public spaces. If you’re loud enough and can rally the
mob, you win the argument and there is no other point of view. Watch NDTV’s debate shows and measure the
decibel count.

High Decibel levels plus numbers have a
gravitational effect on the Truth. The More you Holler, the Truth bends your
way. It’s the fifth fundamental force.